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Wednesday, September 3, 2008

The Decline In Latvian Industry Accelerates Again in July

Latvian industrial output contracted again in July 2008, indicating that GDP contraction will almost certainly continue into at least Q3 2008.

Industrial production at constant prices decreased in July 2008 by 0.7%, according to seasonal and working day adjusted data released today by the Latvia statistics office. Manufacturing was down by 1%, electricity, gas and water supply by 0.5%, while in mining and quarrying there was a monthly increase of 7.7%. The drop in industrial output was largely due to adecrease in the manufacturing of other transport equipment (repairing and construction of ships and boats) which was down by 34.7%, the manufacturing of chemicals, chemical products and man-made fibres, which was down by 8.7%, and in the manufacture of wood, wood products and cork, down by 3.7%.

Compared to July 2007 industrial output dropped by 6.9%, according to working day adjusted data. Manufacturing was down by 9.1%, electricity, gas and water supply by 1.6%, and mining and quarrying increased by 20.9%. The decrease was mainly influenced by the volume reduction in the manufacturing of furniture – down by 44.7% - the manufacture of wood, wood products and cork – down by 15.5% - and the manufacture of food products and beverages – down by 9.5%.

As we can see in the chart above, output peaked in August 2007 and has been declining steadily since.

Latin America

Demography

What is Latvia Economy Watch?

Latvia Economy Watch is a weblog dedicated to following the day to day progress of the Latvian economy. The Weblog arose out of my curiosity about the roots of the particular mix of economic problems which Latvia is facing, and about what might be learnt from studying these as they evolve.

Latvia has a historically unprecedented combination of structural problems stemming from an extraordinarily high inward flow of funds (producing excessive consumer demand) accompanied by an equally high outflow of labour (creating insufficient labour supply). The impact of the migration outflow is further aggravated by the low number of young labour market entrants which can be anticipated over the coming years following the collapse in fertility and live births post 1990.

The issue is further complicated by the fact that the Latvian economy needs to experience very rapid "catch up" growth if she is to become rich before she becomes old, and thus achieve a standard of living which will make supporting the increasing number of elderly dependents both viable and sustainable.

Needless to say none of these problems were ever really contemplated in the economic text books. Dealing with this whole problem set - and it is one which in one way or another is typical of what we may expect to see across Eastern Europe as a whole - has become a most pressing concern, both theoretically and practically.

A great deal more background and information about the theoretical perspective which informs this blog may be found over at the Demography Matters blog.

About

Edward 'the bonobo' is a Catalan economist of British extraction based in Barcelona. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

He is currently working on a book with the provisional working title "Population, the Ultimate Non-renewable Resource".

Apart from his participation in A Fistful of Euros, Edward also writes regularly for the demography blog Demography Matters. He also contributes to the Indian Economy blog . His personal weblog is Bonobo Land . Edward's website can be found at EdwardHugh.net.